How to Manage new Partnerships

Why Strategic Partnerships Matter

80% of leaders search for strategic partnerships, but only 65% find success. Why? Successful partnerships require mutually beneficial relationships that elevate growth. Using a strategic partnership deck helps in forming these relationships by providing a clear roadmap and best practices to follow.

Best Practices for Strategic Partnerships

Innovate Across the Partnership Lifecycle

To innovate across the partnership lifecycle, it's essential to:

• Assess partnership potential and weigh benefits versus risks.
• Avoid failures and build lasting partnerships for sustained impact.
• Track a partnership's activity progress and develop outcome-based measures for success.

Evaluate Potential Risks

Identifying and calculating partnership value against potential exposure to risk is crucial. An evaluation matrix helps in:

• Weighing various partnership options to select the best fit.
• Ensuring organizational buy-in.
• Achieving better brand synergy.
• Acquiring more customers.

Common Reasons for Partnership Failures

According to McKinsey, most strategic partnerships fail due to a lack of focus on areas where the most value is at risk. Successful partnerships need to:

• Match objectives.
• Have effective governance.
• Be mutually beneficial.
• Stay independent.

Stages of a Partnership Lifecycle

A partnership lifecycle consists of several stages, each critical for long-term success.

Initiation

In the initiation stage:

• Create a plan and identify target partners.
• Develop a joint strategy.
• Finalize business propositions.
• Propose alliance organization and leadership.

Formation

During the formation stage:

• Kick off the partnership and incorporate stakeholder interaction.
• Coordinate team meetings and feedback sessions.
• Ensure all stakeholders are aligned and engaged.

Growth

In the growth stage:

• Put people, processes, and systems behind the partnership.
• Manage capital and meet project demand.
• Focus on value growth and create new approaches as needed.

Maturity

As the partnership matures:

• Both parties may need to make improvements.
• Reinvest generated values to enhance the alliance.
• Growth will likely plateau, and synergy should cultivate a unique culture.

Reinvention

In the reinvention stage:

• The partnership may need to be reinvented or spun off into a separate organization.
• Proactively reassess or reinvent to avoid a decline in value generation.
• If necessary, close the alliance to avoid unnecessary blame games.

Real-World Examples of Strategic Partnerships

Strategic partnerships have proven successful for many top brands:

• Kohl's and Amazon: In 2020, Kohl's partnered with Amazon to provide hassle-free Amazon returns at their department stores. This partnership added 2 million new customers to Kohl's over the course of a year, with sales topping analyst estimates.
• Apple Pay and Mastercard, Starbucks and Barnes & Noble: These integrations were so seamless that they became part of daily norms for customers.
• Staples and Office Depot, AOL and Time Warner: On the other hand, these partnerships failed, illustrating the importance of strategic alignment and effective governance.

Key Components for a Successful Partnership

To form a successful partnership, several components need to be aligned with the activities required:

1. Strategic Planning: Develop a strategic partnership plan and estimate the resources required.
2. Activity Alignment: Define the role of each partner, determine key engagement strategies, and establish how to evaluate success.
3. Collaboration: Invest in the program, align staff, and ensure support and program visibility.
4. Communication: Establish a common language among teams and promote ongoing communication to keep everyone in the loop.
5. Marketing: Align key value propositions and develop cross-marketing materials that work in tandem with each other.
6. Evaluation: Measure progress and develop evaluation measures like KPIs. Start this process in the partner selection stage to ensure alignment on objectives and contributions.

Maintaining Effective Partnerships

For organizations already in a partnership, maintaining effectiveness is critical:

• Analyze target market and competitive landscape.
• Evaluate development options under specific criteria like resources, capabilities, and ROI.
• Use a checklist for effective partnerships to assess synergy, common interest, mutual dependency, complementary support, and shared core competency.

Practical Application: Building a Successful Partnership

Imagine leading a new partnership initiative for a successful video-first social network aiming to formalize a partnership with a business-focused video platform. The goal is to attract small business owners and make it easier for them to run sponsored ads on your platform.

Steps to success include:

1. Develop a strategic partnership plan and estimate the resources required.
2. Define associated activities: Determine the role of each partner, key engagement strategies, and evaluation methods.
3. Invest in the program: Allocate funds and develop training tools to encourage collaboration.
4. Promote a collaborative culture: Ensure support and program visibility among all stakeholders.
5. Market the program: Align key value propositions and cross-develop marketing materials.
6. Measure progress: Develop evaluation measures, like KPIs of user engagement and advertiser traffic, to determine if the integration is mutually rewarding.

Conclusion

Strategic partnerships, when well-executed, can significantly boost business growth. By following the best practices and stages outlined above, organizations can avoid common pitfalls and build partnerships that stand the test of time.